I’d like to share some news clips.
First is an account of Maria Haley’s appearance before a legislative committee. Haley, the state’s new Economic Development director, lauded the legislature for a bunch of new business tax credits, but noted that the state’s $200 million fund to lure major industrial plants was small by comparison with Mississippi.
Stephens Media followed up with an interview with Mike Maulden, an industrial recruiter for Entergy, who echoed Haley:
“We’re awful limited to 5 percent of the state general revenues and that may be just a little bit too much of a restriction,” Maulden said. “So that might need to be amended so that we can raise that from the current level of maybe $210 million, to maybe $300 million to be able to compete.”
Now consider a New York Review of Books article on Greg LeRoy’s book, “The Great American Job Scam.” It said:
“The economic development story goes back to the 1930s when a group of southern governors set out to capture some of the manufacturing business of the North by offering cheap capital on top of the traditional lure of cheap labor. In more recent decades, the practice has gone national, and the private sector has taken firm control. To work their will with job-hungry public officials, corporations now routinely deploy teams of lobbyists, site consultants, and other hirelings. The formula rarely fails: drop word of a planned expansion or relocation; create the illusion of a wide-ranging search; overstate the company’s own investment and the number of jobs involved; hire fancy experts to talk about the economic ripple effects; walk off with huge subsidies and tax concessions.”
Yes, that’s us. Arkansas just whooped through a secret tax break for a maker of windmill blades. Maybe the plant will come, unlike the yeast manufacturer that used secret Arkansas legislation to work a better deal elsewhere.
The price will only get higher. Public officials are too timid to say “enough!” Partial antidotes include transparency in the bidding process and careful calculation of the benefits and costs, including the way giveaways have lowered the corporate tax burden at the little guy’s expense.
The review of LeRoy’s book reminded me of North Little Rock, where Mayor Pat Hays is determined that taxpayers pay millions for a sporting goods store, taking money from schools and Arkansas Children’s Hospital, among others. The book review continues:
“Beyond the injury to city, county, and state treasuries — and the services they fund — the economic development process ‘demeans’ and ‘degrades’ public officials, LeRoy writes. He means not only the officials who participate, but also those who are cut out of the process — such as the school board members who get ‘no say in property tax abatements that will corrode their budget’ or the revenue director whose ‘sober advice is upstaged by the frothy projections of an economist rented by the Chamber of Commerce.’ The rules are designed to bestow the biggest rewards on the companies least likely to show any true attachment to workers or communities. New businesses are subsidized at the expense of existing ones. Big-box retailers gain while independent merchants lose. Commercial and social life is pulled away from Main Streets and downtowns toward malls and strips. Local and state leaders have been known to grovel before telemarketing firms, gambling casinos, and the operators of private prisons.”
Ah, yes. Call centers. We gave Southwest Airlines incentives to build one in Little Rock about 14 years ago. It’s long gone.